Retailers are embracing digital transformations to: streamline operations, meet their consumer’s high demands, constantly evolve demands and expectations, and keep pace with incoming buying generations. At the same time, businesses are faced with inflation and increasing interest rates, which are causing consumers to reevaluate their spending habits.
Given this backdrop, it’s more important than ever for companies to continuously delight every customer. Having the right data for insights into the customer journey is key to success.
Today, brands must make data-based decisions rather than rely on guesses about what ever demanding consumers want from them. In other words, being data mature – the process of utilizing data by a company and leveraging it in business decisions – allows for companies to improve their digital products and services for greater customer satisfaction and retention. According to a Heap-sponsored IDC whitepaper, ‘How Data Maturity and Product Analytics Improve Digital Experiences and Business Outcomes’, data mature companies see 2.5 times greater increases in business outcomes, which include increases in revenues and profits, better efficiency, higher customer loyalty and customer lifetime value compared to their lagging competitors.
To create stickiness with customers, retailers can’t overlook the treasure trove of guidance their data holds. Unfortunately, many companies – even leaders in data maturity – are still not making the most of their data and are instead reliant on making investment decisions based on opinions and feelings. For instance, the same IDC White Paper shows that almost two thirds of teams failed to use all the analyses and data made available to them.
The problem with making uneducated guesses
The IDC White Paper also found that 69% of product teams agree that the highest paid person in the room (HiPPo) makes most of their decisions without regard for their collected data. This dependence on gut feelings and ego rather than following the data hinders a company’s ability to correctly identify friction points in the user experience and then quickly adapt to changing customer demands. Without a continuous data-driven feedback loop, decisions are made based on stale data and situations, and product innovation is sporadic at best and counter-productive at worst.
A recent misguided example of this is from retail giant Bed Bath & Beyond (BBB), who attempted to declutter their stores at the direction of their now former CEO Mark Tritton. Tritton led the company to a swift decrease in available products on shelves, which when coupled with the impending supply chain shortage, left shoppers frustrated with too little to choose from.
The former CEO said that the shift was to help customers experiencing “purchase paralysis” in the stores due to an abundance of product options. Tritton’s strategy was based on his past experience of leveraging a similar strategy to great effect at other retailers, such as Target. But was not a positive change for the BBB shoppers as the shift eliminated too many products their customers depended on the retailer to always have.
Ultimately, the retailer lost revenue because upset shoppers took their money elsewhere. BBB backpedaled and began quickly reverting all Tritton’s changes to avoid further damage. This case demonstrates how the former CEO took customer feedback but chose to rely on past experience as a gut feeling to lead his decision making, one that led the company into a struggle it’s still trying to dig out of.
Benefits of data insights and how to capture them
To avoid becoming the next victim of gut-based decision making, brands must embrace a data-driven culture. By being data mature, retailers can draw meaningful connections between the data and their customers' experience in order to create optimal, personalized experiences. The survey shows that data-backed insights help to pinpoint and eliminate friction points for their customers, ensuring a continued positive experience as behaviors and/or needs change.
According to the IDC White Paper, 98% of the most mature companies have a good to excellent understanding of customer journey friction points, while only 29% of the least mature companies reported the same level of understanding. Simply put, mature companies put themselves in a better position compared to their competitors and can make the needed adjustments to improve experiences and retain customers with confidence.
To be considered data mature, companies need the right tools and strategies to efficiently use data. The IDC White Paper shows that 30% of teams use six or more tools to collect data insights, which is inefficient and costly, especially if the collected data is slow, incomplete and disconnected. To overcome this, smart companies are harnessing both qualitative and quantitative data in a single solution for a faster and more complete view into how their customers interact with their brand. Having proper tools like this in combination with a diverse and data-literate team built on a company culture focused on gathering accurate and actionable insights is a must.
Those that have highest maturity gain competitive advantage by addressing questions in minutes and hours unlike the least mature teams that take days and weeks. Today, speed to insight means speed to resolution which is vital in the current market.
Time to become data mature
With the rapidly changing social and economic climate retailers must adapt quickly or risk being left behind. Research shows that teams that use data to guide improvements to their customers’ digital experiences have better results. They increase revenue growth and have a more loyal and satisfied customer base. Investing in data and not guesses guides retailers so they can quickly and effectively adapt to the speed of change, regardless of what’s happening in the world.